A proven approach to helping the ultra-poor

[KamaAina]

http://news.yale.edu/2015/05/14/proven-approach-helping-ultra-poor

Anti-poverty research led by a Yale University economist may have cracked the data code for helping the world’s poorest citizens.

Gathering data from six countries, the researchers tested a comprehensive approach for helping ultra-poor citizens — those 1 billion people around the world living on less than $1.25 a day — increase their income and improve their health. The approach is known as the “Graduation model.” The study followed 21,000 of the world’s poorest people for three years....

“Being ultra-poor usually means more than just not having an income — like not enough food to eat, no way to save, no information, and low perception of their opportunities to escape their situation,” said Yale economist Dean Karlan, co-author of the study and founder of the New Haven-based non-profit Innovations for Poverty Action. “We tested an approach that addressed several factors at once, and found significant improvements, even three years after the program did the bulk of the work.”

The findings suggest that the approach works across a range of cultural, political, and economic variables that have been stumbling blocks in the past to combating poverty. The researchers tracked people in Ethiopia, Ghana, Honduras, India, Pakistan, and Peru. The program included six components over a two-year period:

[daleanime]

1. ......

[Cleita]

2. Hope there is a chance for this to happen in a big way. eom

[Arkansas Granny]

3. Micro loans accomplish much the same thing.

https://www.gsb.stanford.edu/insights/vinod-khosla-microlending-end-poverty

Speaking at the conference on Global Business and Global Poverty at Stanford Graduate School of Business, Khosla used the Indian organization SHARE Micro Finance Limited to illustrate microfinance. SHARE targets rural women in India whose per capita income is less than $8 a month — well below the World Bank poverty line of $30 a month. The organization lends each woman $50 to $100 to fund entrepreneurial projects proposed by the recipients. For example, a woman might open a market tea stall or small grocery or buy a rickshaw or bicycle to transport the wheat grown by her family to market. The rickshaw would allow her family to retain 50 percent of the profits from the wheat that would have gone to pay another transporter. On the high-tech end, some women have opened Internet kiosks that have become profitable within the first three months and have provided a livable wage within six months. "There are hundreds of examples like this," Khosla said.

In what Khosla calls a "virtuous pyramid scheme," SHARE lends money to eight-member women's groups. Because they are all part of the same community, the group members are under strong social pressure not to default. "It's embarrassing to default, and if one person does, the others have to make up for it," he said.

In part because of this sense of community, SHARE has an impressive repayment rate on the more than $71 million it has disbursed in 3000 villages of India since 1994. Of its 197,000 clients, 77 percent have experienced a significant reduction in poverty over the past four years, and 38 percent are no longer considered poor, Khosla, MBA '80, told the audience at the May 19 conference organized by the Center for Global Business and the Economy at Stanford GSB.

"More important," said Khosla, "if you talk to these women, they're empowered. People who are first-time borrowers are always looking down, their head covered with a sari. Anyone who has been borrowing for more than three years looks you straight in the face, eye-to-eye. So a few years of this not only changes their financial status, but also their mental attitude. I have no doubt that this will have all kinds of other consequences."

[KamaAina]

4. Why not combine the two?